Corporate Governance And Shariah Compliance In Institutions Offering Islamic Financial Services: Issues and Options

The structures and processes established within an Institution Offering Islamic financial Services (IIFS) for monitoring and evaluating Shariah compliance rely essentially on arrangements internal to the firm. By being incorporated in the institutional structure, a Shariah Supervisory Board (SSB) has the advantage of being close to the market. Competent, independent, and empowered to approve new Shariah-conforming instruments, an SSB can enable innovation likely to emerge within the institution. This paper reviews the issues and options facing current arrangements for ensuring Shariah compliance by IIFS.